Labor & Employment Law Daily Wrap Up, FEDERAL REGULATIONS—Final rule expands administrative leave uses in workforce restructuring efforts, (Oct 16, 2026)

By Brandi O. Brown, J.D.

AFGE opposed the changes, arguing that the rule violates the ALA and the APA.

The Office of Personnel Management has finalized regulations that formally authorize federal agencies to use administrative leave as a workforce restructuring tool, including in deferred resignation programs and certain reduction-in-force situations, while also establishing new restrictions on how such leave may be used. The rule takes effect 30 days after publication in the Federal Register.

The final rule amends regulations governing administrative leave, reductions in force, and resignations. It largely codifies policies OPM says have already been operating governmentwide since 2025, giving agencies a firmer regulatory basis for practices that became prominent during the Trump administration's efforts to shrink portions of the federal workforce.

Deferred resignation program. At the center of the rule is OPM's decision to explicitly identify workforce realignment initiatives, including deferred resignation programs, as acceptable uses of administrative leave. Under the new regulations, agencies may provide extended periods of paid administrative leave to employees who voluntarily agree in writing to separate from federal service on a future date. The rule also permits agencies to use administrative leave in conjunction with voluntary separation incentive payments and voluntary early retirement authority programs.

Comments “mixed.” Although OPM described the 30 public comments received as “mixed,” its responses were mostly limited to defending its approach against criticism from unions, employee advocates, and individual commenters who argued that using paid leave to facilitate workforce reductions circumvents traditional reduction-in-force procedures and exceeds the intent of the Administrative Leave Act of 2016. The agency said deferred resignation arrangements are voluntary agreements and do not replace statutory RIF requirements such as retention standings, veterans' preference protections, or appeal rights.

AFGE, for example, categorically opposed the changes being proposed, stating that the proposed rule is contrary to the text and purpose of the Administrative Leave Act of 2016 and that it is arbitrary and capricious in violation of the APA. Specifically, it argued that the 30-day comment period afforded by the proposed rule did not provide a meaningful opportunity for interested parties to submit comments.

Costly. Several commenters also pointed to estimates that the government's 2025 deferred resignation initiatives cost billions of dollars and paid some employees for months while they performed no work. OPM acknowledged that such programs involve short-term costs but maintained that workforce reductions can generate substantial long-term savings by lowering payroll expenses.

The agency also noted that workforce-realignment leave is subject to governmentwide limits. Beginning in 2026, employees generally may receive no more than 12 weeks of administrative leave under workforce realignment initiatives unless OPM and the Office of Management and Budget jointly approve a higher threshold.

RIFs. A significant component of the rule concerns employees facing reductions in force. Existing regulations generally provide that employees remain in duty status during a RIF notice period. The revised rule preserves that presumption but clarifies that agencies may place affected employees on administrative leave during all or part of the notice period when officials determine such leave serves government interests.

Resignation withdrawals. The final rule also makes it easier for agencies to deny requests by employees seeking to withdraw resignations after participating in deferred resignation programs. Under revised regulations, acceptance of benefits provided through a deferred resignation agreement, including paid administrative leave, is specifically identified as a valid reason for an agency to reject a withdrawal request.

OPM said agencies lack authority to recoup or reclassify administrative leave benefits after they have been granted, making it reasonable to treat acceptance of those benefits as grounds for denying a change of mind. At the same time, the agency emphasized that employees who believe their resignations were involuntary or obtained through duress, coercion, or misrepresentation retain rights to seek review before the Merit Systems Protection Board.

Physical fitness. Beyond workforce restructuring matters, OPM added a new example of an acceptable use of administrative leave: physical fitness activities. The agency received numerous supportive comments from employees, unions, and other stakeholders who argued that fitness programs could improve productivity, reduce absenteeism, and promote employee well-being. Rather than establish a specific entitlement, the rule allows agencies to provide limited amounts of administrative leave for approved fitness activities at their discretion and subject to mission requirements.

Prohibitions; 10-workday cap. The regulation also establishes several new prohibitions. Agencies may not use administrative leave for investigative purposes after an employee reaches the statutory 10-workday limit applicable to such situations. Instead, agencies must transition to investigative leave authorities established under the Administrative Leave Act. The rule also generally bars agencies from using administrative leave for purposes covered by sick leave and prohibits the use of administrative leave for service as a poll worker or poll observer.

Much of the controversy surrounding the rule centered on OPM's interpretation of the Administrative Leave Act's 10-workday cap. Critics argued that allowing extended administrative leave for deferred resignations and workforce realignment programs effectively undermines congressional limits. OPM rejected that argument, saying the cap applies to administrative leave provided for investigative purposes and does not prohibit other appropriate uses of leave authorized under the agency's regulatory authority.

OPM characterized the regulation as largely a codification of existing policies rather than a major policy shift.

The rule is scheduled for publication in the Federal Register on October 19.

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